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tv   [untitled]    July 17, 2013 6:30pm-7:01pm PDT

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california and calculate an average by those employers. so item 13 is a 10 county average of 10 thousand plus which is an increase. we'll move back to item 12 which is the continuation of our progress. we have members of our board that would like to make a statement to the competent. >> thank you. i want to recognize the board members they're here today so thank you all for being here. do we want to go to the presentation first >> are you ready?
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>> supervisor mar. >> i did want to thank the folks for their work to make sure we have the best justifiable rates for our workings in the city. i want to thank kaiser for looking san francisco plans and working with us to give us more information and transparency and department cindy for meeting with me. i appreciate the folks efforts to explain the situation with kaiser and it's a much clearer process. i want to thank the public employees that both last time have been involved in the process as well as we try to
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continue the great over 60 year relationship with kaiser but making sure we're getting the best plan so thank you folks >> thank you very much. certainly i'm happy to be here and i hope we can move this issue in a positive direction and get on with our process. i wanted to take a minute before i start this proposal and just from a personal standpoint to say a couple of things about where we are and how i see it based on the years i've been involved in the bay area health care. prior to this i was a partner with aig for many years and i
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was a controller for 3 san francisco hospitals. i worked in health care consulting is i have a sense of what we're looking at here. a couple of things i want to say about the kaiser relationship. first, it is unlike our other two mrapdz it, it's a fully insured plan and under this plan the insurerer pace the risk. and clearly in there have been down the years in which kaiser didn't make a profit you can go all the way back to the aids epidemic they were provided for san francisco jeopardy and san francisco general billed them.
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and similarly kaiser was involved if the treatment of the patients during that time. when rates are set their set conservatively. as i look at the plan to this year it's about a 3.48 percent increase really. it's not - it's reasonable from the standpoint that kaiser is managing san francisco general and other hospitals. they have hospitals all over california they own and operate so every year they have to provide the costs.
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and the year over year cost increases is four and a half or 5 percent for based the mayor's office pretty much whae organization budget would look like. there are questions over the profits over a long-term and there are legitimate questions i think fundamentally to look at a 3.48 increase and feel it's not justified is a hard place to be i think, you know, as an employer. so from my standpoint i just want to get that out there. so i'll get into the presentation
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>> thank you supervisor mar. >> i appreciate the long review and you brought up an 80s period that kaiser was not making a profit but from the slow down from our meeting slide number 4 and i know that supervisor scott and lynn and others rice the issue there seems to be between the period an 89 point profit measure for kaiser. i think based on the lower utilization of services and kaiser that was actual costs - let me see this profit margin was 13 percent over the costs they have but you're saying this profit margin is justified >> i'm saying that the year over year costs is over that
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range if you were to look at their projections 3 unlawful percent it is about what hospitals inoccur. there are certainly legitimate questions and much of that coming from utilization gains because the providing the services. i think that part of it is what happened is all the hospitals came together from being independent hospitals and children's hospital catholic health west there's been tremors consolidation in the marketplace and as they formed together
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their positioning became stronger and stronger and they could justify the higher prices. and so kaiser ♪ business they wanted to be a low cost provider but they want to continue that but manage within the corridor of what other insurerers are providing. so that's the world of health care you know insurance and i think - i don't think there's anything unusual about this specific with relation to kaiser. i remember reading the headlines about blue cross putting out
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those high prices and was getting the attention and they backed away from that. there's a lesson there, too this exercise will be something that kaiser will think about when we put together their 2015 rates. do very return something to the employers they will have to grapple with that. this process has value. so i'm arguing that i'm not trying to defend kaiser just when i look at it, it's interesting to three and four with when we're looking a 3 percent increase and that's a very over you'll low increase this is the year this has become the issue for approval.
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in the past this would have stood out when 12, 13 percent increases were the norm. i don't want to spend too much time off my topic but to say that anytime i've been there everything that was presented, you know, at the health service board was fair and i believe that in outlining all our conversations kaiser has not disregard that the information was incorrect. they didn't dispute the facts but again, they're not the only you know unprovider health care in the city. where they are in that, you know, corridor of, you know, reasonable to unreasonable i'm not sure. but their getting all the attention this year
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if it's okay. i'll get into my material. and i agree i wasn't at that meeting but i watched the whole meeting on youtube so i'm familiar with what happened. so i don't know if there's a power point - there we go. i'm going to focus on kaiser. i'll spend a couple of minutes bringing you up to date. i have something for mr. rose. i have - i wanted to touch on the health service board and their position and conclusions
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and then go over our optioned. obviously it is to approve or regret our optioned. i want to decide the optioned of rerejection if you go down that road. we're on about the third slide. is that something that be move forward forward >> we're going to have someone manually move it. >> since the beginning the day after the last hearing we were in hearings with kooigz and been in constant communication as recently as this morning. so they - you know the bottom line really is that therapist in a position to change their rate
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for 2014 they're not able to do it and i think you understand the reasons for is it. they is legitimate i didn't say a standard methodology that is for all employers and can't make changes for one provider without doing something to everyone and their locked into a arrangements that the work is done and they need to move forward. as i said before what they do for 2014 they're to have to deal with that. to give you a sense of work they've done. this docket here i'm going to give this to mr. rose. this is their rate proposal.
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this is not a simple take it or leave it. this is a fully documented proposal that looked at our costs in 2012. we are only in to a few months of 2013 and this is the 3r07b8gd costs. that's the basic approach here. there's a lot more in that but i want to make sure you have the information. we have additional copies for every supervisor >> can you give a copy to the clerk please. so anyway, to move on. while they, reduce their rates they can provide some additional support outside the rating itself.
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and most of our discussions this week has been on what they can do but they have made commitments to us on the level of waterfallness and the things we can do in 2014 and r8d. they've mad other commitments to us. so as i said before they're here to talk with you. so the process itself for rate norwalk. as i said before it's a full analysis. the methodology is consistent with the rates we've gotten in prior years and consistency in
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employer to employer. so it's just the way they do it soe at least kno in the format of their proposal what it's going to be. our auditor reviews this and the premium rate is reasonable and they understand and that the underline method lonely supports that. we can argue about though they have their services but the methodology is the same. the methodology is the same and a i'm sorry to keep interrupting but i'm looking at the recommendations by the service board and the act rate renewal
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was capped and no co- pay increases so employers and members share in the savings a charge no more than 10 percent of interacted care management. i'm wondering >> that notice not our staff that made the recommendations that was the departments. >> how much was the recommendation from the health board. >> actually, my networks slide covers that but bend they approved those so none of changes were forthcoming but at the end they supported the rate package so they sponsored the plan tend to the best interests of the members they needed to move a package forward to allow
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us to do open enrollment so when you weigh the needs of the members for continuity and the open enrollment process they recommended approval. but - all those things and i want to say this addresses that. they are directing us to immediately begin negotiation for 2015 and you said it better than i will the interacted care management and there was concern about the - i think the historic profit margins that appear to be embodied in their financials and
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their say concern about the price net increase. i think at the end they were most interested but it became clear that wasn't going to happen it turns now to 2015 and you have to determine what's in the best interests of employees and the continuity so they voted to forward the rate package to the board of supervisors. there's some members who can speak to that as well. so just to move on to optioned. there are two options. i wanted to make sure there are two opposites but the two options is to approve it and to
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realize $0.31 it's been recommended from the health service board and health department and your legislative analysts to royalties the increase which is remarkably low less than one percent and really to protect the health services from 46 thousand kaiser members and total service system members so we have an open enrollment process. they have their health benefits on january one we're required to provide them. and to regret the rate and send it back to the board and obviously if kaiser is the problem. we would first have to negotiate a rate offer and we have 3 days
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to do that. our staff would video to take the rates and volume plan and provided a another report. we have to give the board notification they could approve it or not. that's something they will have to work through. in any event it will be august 20th. and assuming we could introduce something on the 20th and the first finance meeting would be the 28th in august and there would be a full board review on september 10th. so september 10th would be our best date to wrap up. and when you look at that i want to make sure you understand in
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order to get the offer we have 3 days for blue cross to do. and then august 11th we could have our staff do a report. then we would have to, you know, do the public notice for the hearing that's 3 days and then we would have the hearing on august 15th or 16. it would take us a few more days to put a packet today for mr. rose. the august 28th hearing so all this would have to happen in the span of a month. i don't think in the possible. this would be the timeframe
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we're locked into to get it back to you as early as september 3rdrd. so assuming we get approval now the next slide says we have between september 10th and september 30th which is 20 calendar days to do all the work to get the work and do the calculations to get it into the system to send notices to all the members. this takes three to four weeks and then another three to four weeks to get the materials out to your members. we have 20 total days and 13 business days to get that done. we think we have insufficient
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time to get this done. it's the same issue the health board have is to deal with >> supervisor avalos. >> is it true for your presentation. so you're saying that option b is a bad option? i'm joking and a that i'm not going to say >> the question i have is about option a. opening statements a doesn't preclude the negotiation rate it's toward the 2015 rate when do they begin >> to some expect they've gone already there are some commitments high-level
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commitments but it could start immediately. >> i think that, you know, if we're not going to be doing option b we need to make sure that the work we're doing today is going to have an influence on 2015. i'm concerned but when kaiser comes they're not going to be able to present a starting point null april 2015. and so it looks like we're not going to have firm basis for negotiations until that time which doesn't leaf enough time to pertaining prepare the 2015 rates for our climax around the
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budget. it looks like our efforts are going to be taking it or leave it from kaiser >> we'll be discussing to them and we've had some earlier discussions with them is plan design changes that would move us a little bit more into a self-insured model which we get the immediate benefit independent of you know of of the process. so if i move to a different plan model that's a different impact. the second thing it's possible that we can get a better linkage between the off the costs and the actual volume we captioners so that's a available component. so there are design changes we can do.
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you're right they need a certainty amount of histories to put together the proposal but the methodology is something we can work on between now and then and they can bring back some alternative ways to - they would be looking at typically they'd do in april 2013 and project it to 2015. we're going to get a result likes we've had but it's incumbent upon them is kaiser willing to access accommodated profits to give back to employers next year.
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i don't think anyone who we've talked have will have to come from kaiser. so, you know, i can't will you what it's going to be but i don't think meanwhile it's going to be the same. and if it appears there's no intention to make the change we can look at alternates we could freeze additional enrollment or reduce enrollment and find ways to get people to voluntarily move away and we can look at on the one hand, other plans. so i think we have optioned too. but at any event, you know, just on this i've covered enough on
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the implementations. we do need to remember, if we doing go to a two plan model we have two self-insured plans we can utilize the risks. and there's a big difference between taking risks. the pricing going forward with kaiser could be very much impacted by kaiser. the competition is the best control we've got over the providers and that has some impact. if we only had blue shield and the city plan we couldn't hold the line on cost increases either. so the private hospitals could
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raise their prices and even though we're self-insured we're blue shield the city is paying those claims. so if you get a situation where the competition didn't feel the competition of kaiser it could chan changely. and the budget would have to be recalculated we have to post for the health care benefits and that would have to be recast because it would be a ripple effect. so that's on health care implementations the 46 thousand members have to find new provided as the co- pays would go up. the